Learn in the textbookBusiness Analysis Metrics
DefinitionEfficiency (効率性) is the business-analysis viewpoint that looks at how well a company uses its assets and capital, without waste, to generate sales.
ExplanationThe typical indicator is the turnover ratio, found by dividing sales by an amount such as capital or inventory, and it shows how many times that amount turns over in a given period. A higher turnover ratio means more sales from fewer assets, which is more efficient. The turnover period, given as the number of days one turnover takes, works the other way: the shorter it is, the better the efficiency.
AnalogyShelves of the same size work harder in a shop where goods keep selling and being restocked.
Memory hookThink of turnover as the spins of a top. The more it spins, the better the efficiency, and the shorter each full turn takes.